Rietumu - for all victims of fraudulent account closure and theft of funds

[globalconsultancy]

We are looking for all recent victims of Rietumu fraud, specifically where the accounts were:

- suddenly converted from USD to EUR
- frozen for incoming and outgoing transfers
- closed under Clause 15.7 (Prevention of Money Laundering and Terrorist Finance)
- funds seized or frozen without an explanation

Some background:

We are a small international IT consulting firm with clients and employees located in various international locations. We have used an off-shore company for our operation in order to have each employee and shareholder liable for their own taxes in their own jurisdiction - a pretty standard use of offshore companies.

We have had an account with Rietumu since 2013. Running a very clean operation - all wires in and out properly documented and invoiced, no cash operations whatsoever (no cash withdrawals or deposits), maintaining proper books.

On 23 February 2018, we received a notice from a "Jelena Fjodorova", about the termination of legal relations. We were given until 23 April 2018 to transition to another bank.

This notice notwithstanding, we found our account frozen at the end of March, with another letter from "Rietumu Banka" (anonymous) dated 19 March 2018 stating that the Bank is terminating our relationship effective immediately under Clause 15.7 (the Law on the Prevention of Money Laundering and Terrorist Financing.)

The remaining funds (just under 5,000 EUR) were stolen under the guise of a Clause 15.7 "maintenance fee" (which just happens to be 5,000 EUR).

We would like to file a class action lawsuit against Rietumu to recover the stolen funds.

If you were a victim of their fraud, please send me a private message. They think they can break the law with impunity because their victims are offshore companies. Well, not this company. We have not broken any laws or evaded any taxes and we will not stand for it.

 

[Martin Everson]

Sounds like the bank is simply de-risking offshore client business. Sounds like the currency conversion was done to get clients out of the dollar quickly and your business away from their USD correspondence account. After ABLV collapse these banks are forced to clean up their actions or risk US closing them down like they did ABLV - just by breathing on them...lol

Forget about suing them. These are extreme times for Latvian banking industry and I don't think the law will back you. Especially in an Eastern European country :-(

 

[globalconsultancy]

Absolutely, that's exactly what they are doing. And I have no problem with their de-offshoring policies in general.

The problem is, they are doing it in a fraudulent manner, gratuitously applying Clause 15.7 to customer accounts in order to charge exorbitant account closure fees (5,000 EUR instead of 200 EUR ) and in some cases freeze / steal clients' funds.

Please read the following thread and let me know if you still think it's not worth going after them:

My Experience with Rietumu Bank please read!!!

This "Eastern European" country is a member of the EU. Latvia isn't a banana republic in the Caribbean. They don't get to call our company a money launderer or terrorist, violate their own T&C, steal our money and get away with it.

 

[call2vn]

I am the victim of Rietumu. I want transfer out all the money but they still keep my money under Due Dilligence.
I don't know how to close my account, they are already still my money under many reason.

 

[Flxy]

To the author - yes, they definitely must be sued for exuberant fees and breaking of their own T&Cs.
What they are doing is not just cleaning - but helping themselves for as much money they can get in the process, covering it under various fees - but they all must be _reasonable_ and justified.

We are currently prepearing complaint with Latvian Ombudsman:

Ombudsman - ALCB

This should help with initial dispute.

If it doesn't make them refund frivolous fees, we plan to go to European Courts.

 

[globalconsultancy]

Thank you for the link! Unfortunately, Rietumu is not listed as a member.

Only the following banks are listed as members: Swedbank, SEB, Citadele, Luminor, Norvik, BlueOrange, Investiciju Banka, DanskeBank, PrivatBank, Baltic International Bank, Expobank, Rigensis Bank, MTB, LPB, Signet, Op Bank, Altum

UniCredit is an associate member.

 

[Flxy]

I think being a member is a different thing.. they must be still regulated and overseen by Ombudsman. (Correct me, if I am wrong).

 

[Martin Everson]

Please read the following thread and let me know if you still think it's not worth going after them:

My Experience with Rietumu Bank please read!!!

Sounds terrible If you can get together enough people go for it. What are your goals? What are you looking for just the money you lost or further compensation?

This "Eastern European" country is a member of the EU. Latvia isn't a banana republic in the Caribbean. They don't get to call our company a money launderer or terrorist, violate their own T&C, steal our money and get away with it.

Latvia is a banana republic and always has been. Why do you think you were able to open an account there for an offshore company. All EU countries are not created equal. The EU did not give a damn about helping ABLV as it was not considered an important bank to EU. In fact no Latvian bank is considered of systematic importance to EU. Some of their banks have always been well known money laundering entities for Russians and eastern Europeans. It is a well known fact. Remember Baltikums (now BlueOrange) bank that was just a washing machine for Russian money? Remember the old website where it blatantly offered to hide the owner of money and conduct transactions in its own name as a damn service? lol. After issues with money laundering they turned their back on those actions and rebranded to BlueOrange bank. Shame Rietumu did not cleanup their act. Your company is just collateral damage. For a bank willing to launder money stealing your money is nothing to them. Hire a good lawyer and good luck try and settle out of court. You don't want to travel there to plead your case.

baltikums bank | Lawless Latvia

 

[Flxy]

Martin, you have some valid points, but I believe exaggerating overall.
Our partnership is based in the UK, it is not offshore company, all members are physical persons, not untraceable offshore companies (as many have used to abuse LLP structures just to have their presence in EU, instead of their own offshore jurisdictions).
We have personally visited Rietumu office in Riga to open our bank account.
Rietumu has conducted their "deep analysis" of our business just at the end of the last year. They had no further questions.
Then, suddenly, they stop servicing our account, freeze a large amount of money, disrupting our business and start charging unjustifiable excuberant amounts of money just to "carry out another review" to determine whether to allow us to withdraw our funds after declaring end of business relationship. This is all ridiculous and pathetic, even for Latvia.

We will certainly pursue it further with Ombudsman, Courts and whatever is required to stop EU institution from racketing in a day light and I am sure they can be held responsible for all their arbitrary and unlawful actions.

 

[Martin Everson]

Why did you choose Rietumu bank? Of all countries and banks in the world why a bank in Latvia? Did you not do any research at all before opening an account there? For me its difficult to understand how you did not know the risks of opening a bank account in an Eastern European country..lol. Latvia is one of the poorest EU countries just above Croatia, Romania and Bulgaria.

If I open a bank account in a non-western country I know damn well all the risks and do my homework thoroughly. The information on Latvia as a shady banking sector for Russian money was out there for years. Latvian banks know very well that only shady foreigners put there money there. No foreigner with clean funds, business and nothing to hide chooses Latvia. They also know they can take the money as most clients will not complain as its often illicit gains they have deposited. In your case it may be clean funds and a clean business but who cares.....they certainly don't as they have shown. To them you are foreigner with offshore company and an easy target.

Sorry but you only get what you deserve by not doing due diligence or spending 5 minutes on google before travelling to Latvia to open an account.

You learn from your mistakes. But to try and get back 4800 euros or however much they took, from a banking sector the EU does not give a sh*t about is not the best use of your time. I know it must hurt to lose money but trust me you learnt your lesson and will become wiser in your choices in the future.

 

[Flxy]

I have relatives in Latvia and visit it often; Moreover, our business required RUB accounts - for that a choice in Europe is limited to Latvia, Cyprus and perhaps a few other countries, which aren't any better than Latvia.

No foreigner with clean funds, business and nothing to hide chooses Latvia.

This is an exaggeration and not true. In the UK we can't open account as non residents, other countries are having more liberal approach and risk appetite. I am originally from xUSSR too, which Latvia was a part of. There is nothing special to choose one of those countries for banking. Of course we knew about poor reputation and shady business prevailing there, but we thought it won't affect us as a legitimate business and we also have 100K EUR deposit protection from Latvian government.

They also know they can take the money as most clients will not complain as its often illicit gains they have deposited. In your case it may be clean funds and a clean business but who cares.....they certainly don't as they have shown. To them you are foreigner with offshore company and an easy target.

Yes, that is the trick they are trying to play on every of their customer now.We won't let them do it easily, as it's not a matter of money, but a matter of principle.
We already received some indications from their legal department that they are willing to re-consider their charges partly or even in full. Hope it works out.

Thanks for your input and support.

 

[Martin Everson]

You explained important information about your choice of Latvia. Just hope things turn out well, and like I said learn from this going forward.

 

[David97255]

Sounds like the bank is simply de-risking offshore client business. Sounds like the currency conversion was done to get clients out of the dollar quickly and your business away from their USD correspondence account. After ABLV collapse these banks are forced to clean up their actions or risk US closing them down like they did ABLV - just by breathing on them...lol

Forget about suing them. These are extreme times for Latvian banking industry and I don't think the law will back you. Especially in an Eastern European country :-(

Martin,

I usually appreciate to read your comments because they are useful.
But I don't follow you, I must say that I don't have account with Rietumu since years, with no making pursuing. It's worth. I done it with another EMI this week and it s sounds good.
All those bank or EMI hiding under AML laws to block account and keep the money ad vitam eternam

 

[Martin Everson]

Hi David,

Thanks.

I see what you are saying but that's the reality. If you keep money in any financial institution be prepared to lose it, have it blocked or misappropriated. Eastern European banks especially Latvia in particular are banana republic banks I am afraid to say. It may offend some people as the truth hurts. I am prepared to be criticized therefore.

Moldovan bank fraud scandal - Wikipedia

However if it makes someone think twice about banking there. Or stops another loss then its achieved something I guess. These banks act like a Mafia's - yes me know that. You can see by the topic of this thread the banks do what the hell they want with your money including steeling it outright...lol. There is no shame in their game.

So ok banks can hide behind AML. But this is true of all banks. I have on half a dozen occasions had substantial amounts of money frozen for up to 18 months. I learnt the VERY VERY hard way not to put substantial amounts of money (or money I am not willing to loose) in any jurisdiction that does not follow English common law. Why you think a lot of Russian money flows (or did) into UK? Perhaps they know a thing or two about what goes on closer to home with the banks ;-)

Just spend some time researching Eastern European banks. Scary stuff!!!

 

[extremedox101]

man i'm with you , sue the hell out of them

 

[Flxy]

Martin,

Russian money flowing into the UK are for storage, preservation and wealth management.

If you run an active business, involving Russia, UK banks won't take you on board.
I spoke to several UK banks and some US banks - they don't want to take any clients whose business has _any_ relation to Russia, doesn't even matter if it's not physical stuff, but online e-commerce, advertising..etc.

UK banks are very conservative and at the moment avoid any kind of risk at any cost.

Why all innovation happens in Eastern European banks now? (Crypto-currencies, EMI, Fintech startups).
UK has a lot of fintech startups but many of them bank in Eastern Europe (Revolut in Lithuania, for example).

So, for many businesses UK banking is hardly an option.

 

[extremedox101]

i thinks it's true that many startups are based in EE . cex, coinmama, bitstamp, revolut, mt , etc. but sometimes i see they are registered in uk .

 

[Martin Everson]

When you say UK banks you have to be specific. Banks fall into three categories.

1) Retail banks 2) Private Banks 3) Investment Banks

If you are a Russian not living in the UK and try to open an account with a retail bank - forget it. If you try a private bank or foreign private bank resident in the UK you will have better chance. If you try investment bank there is also no problem with opening. Russia is a major commodity producing country and UK needs commodities, natural gas, oil, metals etc. A lot of wealthy Russians live and bank in London - I know many. It is not a UK problem it is a global issue as banks are de-risking their businesses i.e closing offshore branches in caribbean etc and Russian client business is considered risky. In the end it is not profitable on a risk/reward basis to have Russian clients in a retail bank. A retail corporate account does not generate any income for a bank unless you seek trade finance services, are investing with them etc. What bank wants to take on risky business if there is no money in it?

The reason why people use Eastern European banks is because the banks are less strict. Is that a good thing? No. Lithuania, Estonia, Latvia etc are also favorable to tech startups because of this and because they produce very talented programmers just like India does. The UK financial sector is VERY important to the UK so it has to be safeguarded to keep its reputation in tact. Eastern Europe wants a competitive advantage and fintech is one way it can grow its economies. However the sacrifice is in the end its reputation and financial system will be in tatters. When someone says Eastern Europe bank I think shady PSP/EMI, money laundering and easier banking than western europe.

 

[Martin Everson]

Eastern Europeans register businesses in London as it is the easiest and cheapest place to open a company. The UK also has a excellent reputation and gives legitimacy to their business. The UK has a better reputation than their home countries and is stupidly easy to start a business.

 

[globalconsultancy]

Indeed, after working out the tax kinks, we have reincorporated in the UK and are now banking with Lloyds (they offer multi-currency accounts if you ask nicely.)

It's just more headache and paperwork, and you do need a UK-resident director to open a retail business account.

So how many people besides Flxy are Rietumu victims? Say #metoo.